Horizons newsletter – Week 15 // 2017
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
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In the past decade, most active managers failed to beat their index, leading to massive inflows into passively managed funds. As a result, 2017 was set to be another rough year for active investing, with extreme scenario’s questioning if 2017 would herald the end of active investing. However, contrary to these beliefs, active managers have started 2017 with a boom. During and after the financial crisis most investors sold off risky assets, while markets overflowed with liquidity pumped in with quantitative easing programs by central banks. But now the course of supportive monetary policy seems to be tilting, with clear market impact as markets and assets tend to move less in tandem. Morgan Stanley speaks of a ‘correlation crash’, as asset correlations more than halved since the end of 2016. Furthermore, geopolitical and political risks – including protectionism, anti-globalism or Trumps Twitter Artillery – increase idiosyncratic risks and break down the linkages that boosted passive index funds and ETFs. In 2017’s investment climate, active stock picking could experience a revival.
Scandalizing Ad Tech
Since February top brands have been pulling their ads from YouTube after discovering that their ads appear next to inappropriate content. This issue, though, is not new, nor is it easy to fix: there is simply too much content to police with a human workforce. But there is more at play here. The advertising industry as we know it is changing with global internet ad spend overtaking TV advertising for the first time according to Zenith Optimedia. These changes bring concerns about brand security more to the fore, but they also raise the question about the added value of the agencies. With Google and Facebook aggregating both consumers and publishers on their platforms, agencies will have to find ways to add more value by being less of an intermediary between advertisers and multiple publishers and more of a strategic creative partner that helps to connect brands to consumers through advanced data tools. Google and Facebook are ahead in this data game, now the rest of the industry has to figure out their game play.
People in advanced industrialized societies are growing older. In 2050, the number of people over 65 globally will more than double when the baby boomers increasingly retire. This is seen as a threat to the competitiveness of economies, and a burden in terms of pensions and care of seniors. However, because baby boomers are different from earlier generations a new opportunity arises: the Silver Economy. According to McKinsey, those aged 60-plus will account for nearly 60% of consumption growth in Western Europe and Northeast Asia in the period 2015-2030. Moreover, this group is rather tech-savvy: they were for instance among the first to use a mobile phone. They don’t fear technology, but rather perceive it as ‘liberating’. Smartphone applications for instance grant them access to goods and services, such as health trackers, robot caregivers, voice assistants, and social apps to tackle loneliness. In the near future, it will not just be the youth but the elderly as well who define the development of and market for technology.